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Hillenbrand, maker of caskets under the centennial brand Batesville Casket, went public in 2008 and diversified into industrial machinery by creating a group of process equipment.
The acquisition of Milacron – the largest US manufacturer of plastics machinery – is a worldwide diversification of steroids. Hillenbrand President and CEO Joe Raver said the agreement gives the company a global reach in all areas of the plastics machinery sector.
"I am firmly convinced that it is the next step in Hillenbrand's vision of becoming a diversified, world-class industrial corporation," said Raver at a conference call after the announcement. "In the Milacron business, we have, you know, a really great technology, a huge customer base, and they're good companies with good growth profiles and operating margins."
Raver added, "Milacron pursues its strategy to generate profitable long-term growth and generate value for our shareholders."
Milacron brings to Hillenbrand three business segments: Advanced Plastics Processing Technologies, which manufactures injection molding machines, extruders and structural foam machines; Melt Delivery and Control Systems, which manufactures hot runner and process control systems, mold bases and components under the Mold-Master, DME and Tirad brands; and Fluid Technologies, the Cimcool product line of metalworking fluids.
When the transaction is completed, Hillenbrand's shareholders will own approximately 84% of the amalgamated company and those of Milacron approximately 16%.
Under the terms of the agreement, Milacron shareholders will receive $ 11.80 in cash and Hillenbrand common shares at a fixed exchange rate of 0.11612 for each share they hold. Based on Hillenbrand's closing price on July 11, the last trading day prior to the announcement, the amount of cash and shares for Milacron's shareholders is $ 18.07 the action, which represents a premium of approximately 38% over the weighted average price per 30-day volume of Milacron.
Milacron shares climbed 21% as of July 12, following the release of the buyback. Shares traded 24.5% to 16.84 dollars Friday afternoon. Hillenbrand's shares fell by 15% before the market opened. Shares traded down 11.09% to 34.56 USD in the afternoon. The stock has a 52-week high of $ 53.41 and a 52-week low of $ 33.75.
The $ 2 billion purchase price includes a $ 686 million Milacron debt. Hillenbrand Chief Financial Officer Kristina Cerniglia said Hillenbrand was financing the cash portion of the debt transaction via a bridge financing facility. The company will refinance Milacron's debt, she told financial analysts at the teleconference.
Following the conclusion of the agreement, Hillenbrand will focus on debt relief and look again at strategic acquisitions, Cerniglia said. Within three years of closing, Hillenbrand is forecasting $ 50 million in cost savings as a result of lower public costs, operational efficiencies and better purchasing efficiencies.
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